Target Corp saw its comparable sales for the quarter beat estimates by analysts, helped by more traffic and strong demand for its goods in its signatures categories that are higher-margin, which includes products for children, apparel, and health and fitness. Analysts had projected $1.54 in adjusted per-share profit and $21.75 billion in sales, according to Thomson Reuters. Chief Executive Brian Cornell said Wednesday that five straight quarters of increased traffic at Target stores and momentum in the lines he has flagged for growth “demonstrate that we are focused on the right strategic priorities”.
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The performance by Target in its apparel contrasted with the weak sales for a number of other retailers during the November and December holiday shopping season.
Earlier this week Walmart reported a 0.6% increase in same store sales and e-commerce growth of only 8%, raising questions about how well it is fighting back at Target and Amazon. Digital sales in the fourth quarter meanwhile increased 34 percent.
Online sales accounted for 5% of sales in the fiscal fourth quarter ended January 30, up from 3.7% in the year-earlier period.
That is in comparison to a $2.64 billion loss, which equal $4.10 per share for the same period but one year ago.
Target shares rose $2.95 to close Wednesday at $76.94.
In terms of guidance, the company expects first-quarter EPS to be in the range of $1.15 to $1.25, which compares to the consensus estimate of $1.19. Comparable store sales climbed 5.2% year over year in the fourth quarter, while US comparable sales climbed 5.5% for the quarter.
Concerns about a slowdown in Target’s digital sales were also alleviated by its 34 percent growth in the quarter, Sterne Agee’s Basanta said, terming it “solid progress for Target’s still nascent platform”. It cut prices on categories like toys and offered free shipping to online customers.
A CNBC report added, “On a conference call with investors, the company’s management attributed the uptick to several factors – namely, broad and easy-to-understand promotions; the ability to choose whether to pick up orders in store or have them delivered; and a 20 percent improvement in its in-stock position”.
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Revenue slipped 0.6 per cent to $21.63-billion on the sale of its pharmacy business to CVS, also a bit shy of Wall Street expectations.
